Edited by Geoffrey Poitras
Chapter 1: Capitals of Capital
1 Youssef Cassis International financial transactions have always been organized within a given geographical space, usually an urban area, in other words in the leading international financial centres. Their role is candidly described by David Scholey, a former chairman of SG Warburg & Co., a renowned City of London merchant bank now incorporated into UBS, who acknowledged in 1987 that: ‘Although we would like to pretend otherwise, the financial markets are, basically, pretty simple things. All they require is a surplus of capital, a roughly offsetting deficit of capital and an intermediator or intermediation process.’2 The definition is clear, though it could be somewhat extended by considering a financial centre as the grouping together, in a given urban space, of a certain number of financial services; or, in a more functional way, it can be defined as the place where intermediaries coordinate financial transactions and arrange for payments to be settled. In both cases, this concentration can chiefly be explained by external economies, in particular in terms of liquidity and efficiency of markets, diversity and complementarity of financial activities, workforce skills, and high-quality information. Stock markets have been at the very heart of international financial centres and part of their global development: they cannot be understood independently from one another. This chapter is thus concerned with these ‘capitals of capital’, the world’s leading international financial centres, from the late eighteenth century to the present. Given the transformation of the world economy, their number has remained remarkably stable, yet without being rigid....
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